PTAB May Not Cancel Claims on the Grounds of Indefiniteness in an IPR Proceeding

In Samsung Electronics America v. Prisua Engineering Corp., Appeal No. 19-1169, the Federal Circuit held that the Patent Trial and Appeal Board (“PTAB”) may not cancel claims on the grounds of indefiniteness in an IPR proceeding.

Samsung petitioned for inter partes review (IPR) of a patent owned by Prisua directed to generating an edited video data stream through video image substitution. The PTAB initially determined that it would only review one of the claims for obviousness. However, the PTAB concluded that the claim was indefinite. Because the PTAB was unable to construe the claim, it concluded that Samsung had not established a reasonable likelihood of prevailing in showing the claim unpatentable. As the IPR was close to concluding, the Supreme Court issued its opinion in SAS. The PTAB modified its institution decision to include all challenged claims and all grounds in the petition. The PTAB allowed the parties to file supplemental briefing. In its supplemental briefing, Samsung urged the PTAB to cancel the claims on the grounds of indefiniteness. In its final written decision, the PTAB concluded, in part, that certain claims were indefinite on the basis of the Federal Circuit’s decision in IPXL because the claims recited both an apparatus and a method of using that apparatus and additionally invoked §112(6) for the recitation of a “digital processing unit” element. Further, the PTAB found that it could not apply the prior art to the claims. Thus, the PTAB found that Samsung failed to show that certain claims were unpatentable under any of the asserted grounds. Samsung appealed and challenged the PTAB’s decision not to cancel the claims it found indefinite. Samsung argued in the alternative that the PTAB should have applied the cited prior art to the claims.

The Federal Circuit held that the PTAB may not cancel claims for indefiniteness in an IPR proceeding. To support its finding, the Federal Circuit pointed to the Supreme Court’s statement in Cuozzo that the Patent Office would be acting “outside its statutory limits” by “canceling a patent claim for ‘indefiniteness under § 112’ in inter partes review.” Further, the statutory provisions governing the IPR process do not allow the PTAB to institute review for indefiniteness. The Federal Circuit also rejected Samsung’s contention that the PTAB’s inherent authority to perform claim construction during IPR proceedings means that the PTAB may cancel claims for indefiniteness. Samsung, as the petitioner, was thus not permitted to request that the PTAB cancel the claims for indefiniteness and the PTAB was not permitted to cancel the claims on the grounds of indefiniteness. However, the Federal Circuit found that the PTAB erred in applying §112(6) to the term “digital processing unit.” The Federal Circuit also found that the claims could be reviewed in relation to the prior art despite a finding of indefiniteness under IPXL and thus remanded for further consideration on that issue.

Express License of Patent Includes Implied License of Continuations

In Cheetah Omni LLC v. At&T Services, Inc., Appeal No. 19-1264, the Federal Circuit held that the express license of a patent includes an implied license for its continuations, including continuations of continuations, because they disclose the same inventions as the licensed patent.

Cheetah Omni LLC (“Cheetah”) sued AT&T Services, Inc. (“AT&T”) for infringement of U.S. Patent No. 7,522,836 (“the ’836 patent”) directed to optical communication networks. Ciena Communications, Inc. and Ciena Corporation (collectively, “Ciena”) moved to intervene in the suit because it manufactures and supplies components for AT&T’s fiber optic systems which formed the basis of Cheetah’s infringement allegations. Ciena and AT&T moved for summary judgment claiming Cheetah’s claim was barred by a license agreement, which settled a previous litigation involving Cheetah and Ciena. In 2011, Cheetah sued Ciena for infringement of U.S. Patent 7,339,714 (“the ’714 patent”), which resulted in a license agreement between Cheetah and Ciena (the “Ciena License”). Ciena and AT&T argued that the Ciena License included an implicit license to the ’836 patent. The district court agreed, granting summary judgment and dismissing the suit with prejudice. Cheetah appealed.

The Federal Circuit affirmed the district court. The Federal Circuit looked to the language of the Ciena License to determine whether it included an implicit license to the ’836 patent. In the Ciena License, “Licensed Patents” were defined broadly to include the Patents-in-Suit and “all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit.” The Federal Circuit explained that it is key to the dispute to understand the relationship between the ’836 patent and the ’714 patent. The ’714 patent is a continuation-in-part of its parent, U.S. Patent No. 6,943,925 (“the ’925 patent”). Accordingly, the Federal Circuit held that the ’925 patent is expressly licensed in the Ciena License. In a separate chain from the ’714 patent, the ’836 patent is a continuation of a continuation of the ’925 patent, as shown in the figure below. The Federal Circuit explained that because the ‘925 patent is an expressly licensed patent in the Ciena License, the agreement also includes an implied license to a continuation of its continuation (or “grandchild”), the ’836 patent. The Federal Circuit further stated that Cheetah had an obligation to clearly state if it did not intend its license to extend to claims presented in continuation patents, which it failed to do.

IPR Petitioner Does not Impermissibly Raise New Arguments when Disclosing on Reply a Different Example of an Algorithm Discussed in its Petition

In Apple Inc. v. Andrea Electronics Corporation, Appeal No. 18-2382, an IPR petitioner relying on a prior-art algorithm was not required to discuss all potential permutations in its petition, and did not raise “new arguments” on reply by disclosing a different example of the same algorithm.

Andrea sued Apple for infringement a patent relating to reduction of background noise in audio signals. Apple thereafter filed two IPR petitions. The PTAB instituted both petitions and consolidated proceedings. In one of the IPR’s, Apple argued that an algorithm in one of its prior art references disclosed the required limitations of the claims. In support, Apple’s expert provided an example using the prior-art algorithm which assumed there were no “sub-windows” (units relating to the amount of signal being analyzed). Andrea responded that Apple’s argument was flawed because that prior-art algorithm requires at least multiple sub-windows, and even in view of multiple sub-windows, the algorithm failed to disclose the claimed limitations. On reply, Apple submitted an expert declaration discussing an example of the prior-art algorithm with multiple sub-windows, which showed that even in the multiple “sub-windows” context, the algorithm still disclosed the claimed limitations. The Board declined to consider Apple’s responsive arguments regarding multiple sub-windows, finding that the arguments raised a new theory of unpatentability for the first time in reply, and held the relevant claims were not invalid.

On appeal, the Federal Circuit vacated the Board’s decision and remanded for consideration of the arguments raised by Apple in its reply. The Federal Circuit noted that Apple’s reply asserted the same legal position (that Andrea’s claims were obvious over the prior art), relying upon the same prior art algorithm, to arrive at the same result (that Apple’s prior art reference disclosed the required limitations). The court distinguished this from situations where an IPR petitioner relies on “previously unidentified portions of a prior-art reference to make a meaningfully distinct contention” or cites “new non-patent literature references.” The panel held that IPR petitioners relying on an algorithm cannot be required to discuss all potential permutations in their petition or risk waiving the opportunity to discuss other examples in reply.

A “Regular and Established Place of Business” Under the Patent Venue Statute Requires the Presence of an Employee or Agent Conducting Defendant’s Business

In In re: Google LLC, Appeal No.19-126, the Federal Circuit held that a defendant does not have a “regular and established place of business” for the purpose of establishing venue under 28 U.S.C. § 1400(b) if it has no employee or agent regularly conducting its business in the district.

Super Interconnect Technologies sued Google in the Eastern District of Texas for patent infringement. Google moved to dismiss or transfer the suit, arguing that venue was improper. The district court denied the motion, opining that the presence of several Google servers in the district constituted a “regular and established place of business” under the patent venue statute, 28 U.S.C. § 1400(b). Google petitioned the Federal Circuit for a writ of mandamus.

The Federal Circuit granted Google’s petition. The court noted that it previously had denied mandamus in a similar case involving Google but concluded that mandamus was appropriate at that point to resolve inconsistencies that arose after the district courts’ application of In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017). In re Cray identified three factors that a plaintiff must show to establish that a defendant has a “regular and established place of business” under the patent venue statute.

The Federal Circuit found that Google’s servers constituted a “place” under the first Cray factor, but not a “place of business” under the second Cray factor. The court agreed with Google that the second Cray factor requires an employee or agent to be present in the district. Relying on the historical relationship between the statutory provisions governing venue and service, the court concluded that, for a defendant to have a “regular and established place of business” for venue purposes, there must also be an “agent . . . engaged in conducting such business” who can accept service. The court rejected the argument that Internet service providers (“ISPs”) that hosted Google’s servers could be considered agents conducting Google’s business. The court reasoned that, while the ISPs have an obligation to perform on-site maintenance of servers that suggests an agency relationship, such maintenance activities are “meaningfully different from” and “only ancillary to” Google’s business.

Judge Wallach joined the majority’s order and issued a separate, concurring opinion, in which he raised the possibility that Google’s end users located in the district could be considered Google’s agents “by virtue of voluntarily or involuntarily sharing information generated on Google’s servers.”